A Solid Value Proposition is Key to Entering the Hospital Market
If you are currently running a medtech startup you may be ready to sell your product to a hospital and are in need of some advice. On October 2, 2023, over 80 medtech professionals gathered at the New England Health Executive Network (NEHEN) panel to hear a set of industry experts provide that key advice. In an insight filled discussion, five professionals addressed the topic “Hospital Value Analysis: Why it matters more than ever!” providing insights and perspectives on the challenges currently facing hospitals today, especially for new medical technologies. Overall, the audience heard loud and clear that it is more challenging than ever to get traction with a new product in a hospital, but with the right product profile and demonstration of a real value proposition, there is still hope.
The panel opened with John Strong, Chief Consulting Officer at Access Strategy Partners, asking the panel to help the audience understand the current temperature of value analysis in hospitals. Mr. Strong indicated that in his career he “hadn’t seen a market like the one we are in today,” given the dynamics in place after COVID, staffing shortages and attitude changes for staff and patients as well as changes in reimbursement.
Dr. Frederick Browne, Vice President, and Medical Director at Griffin Hospital in Connecticut, agreed, indicating that when clinic visits and ambulatory surgeries ground to a halt, the hospital looked for other ways to work through COVID. Their approach, providing expanded services related to COVID, worked to bridge the gap, however, now that those services were no longer needed, they are trying to get back to normal. Dr. Browne said, “Now, we are struggling to make ends meet as insurance funding is much different now than in the past. We are seeing as much as 60% decline in some areas.” He followed this by saying that “technology vendors must keep this in mind when bringing a new product to a hospital customer.” Some hospitals are struggling financially, and the right product will only be adopted with the right profile, at the right time.
Three areas were highlighted as key to adopting new technology at a facility like Griffin Hospital, according to Dr. Browne:
First, the technology must improve the quality of the patient’s life. This must be demonstrated before the senior team will even consider bringing a new product in.
Next, an illustration of the potential for new revenue for the hospital must be provided. A new revenue stream is always beneficial when considering the economic impact of a new technology.
Lastly, a clear understanding of the potential to save the hospital money is needed. Reduction in costs associated with the patients' length of stay, use of supplies and staffing costs are all considerations.
Given the current pressures facing medtech companies, Joanna Almeida, VP Consulting at Access Strategy Partners suggested that there are ways to address the challenges through the right set of analysis and assessments. “MedTech company leaders need to understand the value analysis process from start to finish and be sure to highlight the clear value that their product brings to the table,” Ms. Almeida instructed. Leveraging her experience with clients, Joanna shared that many small company leadership teams make the mistake of skipping the collection of user inputs or the voice of the customer (VOC) which is paramount to creating a cohesive value proposition for any new medical product. She continued, “collecting VOC from clinical users as well as supply chain professionals will prepare vendors for collaborative conversations with the Value Analysis Committee (VAC) and support your value proposition.” With VOC in hand, sales professionals can be better prepared to contribute to hospital initiatives and open a dialog about how a new product could help them reach their goals.
After collecting VOC, demonstrating patient value and generating a compelling revenue and cost analysis may put you in a good position to share your value proposition with a target hospital, however the hospital may not be ready to take on a new product. “Making blanket claims about the benefits of a new product could backfire. You need to understand the purchasing dynamics at each hospital and be clear on the full portfolio that you are selling against,” said Michael Prokopis, VP Supply Chain Management, MD Anderson Cancer Center. “I prefer that sales teams provide a per-patient benefit rather than a system-wide perspective which allows me to calculate the real value to my specific facility rather than working with an overly optimistic, or incorrect, big-picture calculation.” The potential for value will be reflected on the desire for cost neutrality across the system and considered with the opportunity for improved patient care in certain target areas or shorter length of stay in other high visibility areas, for example.
Even with the tighter hold on budgets and stricter analysis processes in place, all panelists were still optimistic about new and innovative technologies entering the hospital setting. Mr. Prokopis indicated, “I will still consider a new product, balancing the risk with the potential of real value, before taking it on.” However, on initial contact, vendors must be able to communicate a succinct and powerful summary of the value proposition, taking only five minutes of hospital staff time. This short summary should highlight the findings from the VOC which indicate how the facility, clinician and/or patient will benefit and outline the overall cost story in order to get a second meeting.
Overall, the panelists agreed that 2024 was going to be a particularly difficult year for new products entering hospital systems given the lingering expense recovery needed from COVID and reimbursement pressures that are being seen. Given these issues, creative vendors should look to bring a relationship-based arrangement rather than transaction-based contract to the table as hospital organizations are looking for ways to partner with companies. That being said, new technology is still seen as exciting and desired by hospital teams, providing opportunities for attracting new physicians and more patients to their facilities; however, these new technologies must be presented with a solid and succinct value proposition in order to be successful, especially in these challenging times.
MedTech Strategies LLC (MTS) has provided marketing leadership for medical technology companies since 2014. Ilsa Webeck, Managing Director and Founder, works with organizations in need of marketing support throughout the product development process. MTS can help assess commercial viability through structured research methodologies resulting in actionable recommendations which support a solid product value proposition and position
for market success.
New England Healthcare Executive Network (NEHEN) is a member-focused community of senior healthcare executives representing a broad range of market verticals including medical devices, biotechnology, pharmaceuticals, health IT and healthcare providers. The members are professionals committed to building relationships, sharing knowledge, and gaining insight into the key issues and opportunities affecting the industry.
Access Strategy Partners, Inc. (ASPI) simplifies the acquisition of leading-edge, value-based healthcare technology for providers and supply chain organizations by aligning them with qualified, relevant medical products manufacturers from around the globe. ASPI works with a select group of manufacturers, providing knowledgeable key account management representation and related services, to position them for successful market access with key providers and contracting organizations.